In response to my article on Net Neutrality yesterday, some readers claimed that since ISPs are already regulated (i.e., granted partial monopoly power) then Net Neutrality is good. In short, their position is: there’s already regulation, so the answer is more regulation.
More regulation, of course, just gives Comcast and other ISPs that enjoy partial monopolies more of a hold on the industry, just as airline regulation under the Civil Aeronautics Board served to ensure that the air travel industry was regulated in such a way as to protect Pan Am and other status quo market players from competition.
But when the Civil Aeronautics Board was eliminated, airlines had to compete for customers, with predictable results. That is, when the airlines were (largely) de-regulated, thus greatly weakening airline monopolies within certain market areas, airline travel only got cheaper and more accessible. Airline travel used to be a luxury experience, attainable to only those with a significant amount of disposable income. This is why many old-timers today whine about how airline travel isn’t the wonderful experience it used to be. It’s not “classy” anymore, they complain. That’s true. Airline travel is no longer “classy” because ordinary people can now use it. People who used to be on Greyhound busses are now on airplanes. That’s what we call economic progress. And it’s largely thanks to airline deregulation.
Those in favor of Net Neutrality want to move in the opposite direction. They want a strict regulatory regime that will in reality ensure that the incumbent industry players will be shielded from any new firms entering the market, and will ensure the price of service remains high, non-innovative, and politically controlled. They want a partial monopoly replaced with a full monopoly, based on nothing more than the baseless assumption that the politicians on the FCC will look out for the little guy - something that has never happened in the history of this type of regulatory body.
Correct reform — that is, reform in the direction of freer markets — is to stop assigning monopoly rights in certain markets to certain government-favored corporations, and to allow free entry into the marketplace from competing firms and new innovators. The first half of Peter Klein’s Mises Weekends interview addresses the economic issues behind this and the fallacy of viewing ISPs in the old model of “public utilites.”
Ron Paul sums this up in his response to yesterday’s FCC vote.
Today the Federal Communications Commission (FCC), a non-elected federal government agency, voted three-to-two to reclassify broadband Internet as a common carrier service under Title II of the Communications Act. This means that – without the vote of Congress, the peoples’ branch of government – a federal agency now claims the power to regulate the Internet. I am surprised that even among civil liberties groups, some claim the federal government increasing regulation of the Internet somehow increases our freedom and liberty.
The truth is very different. The adoption of these FCC rules on the Internet represents the largest regulatory power grab in recent history. The FCC’s newly adopted rule takes the most dynamic means of communication and imposes the regulatory structure designed for public utilities. Federal regulation could also open the door to de facto censorship of ideas perceived as threatening to the political class – ideas like the troops should be brought home, the PATRIOT Act should be repealed, military spending and corporate welfare should be cut, and the Federal Reserve should be audited and ended.
